Friday, November 20, 2015

The drop in soda consumption represents the single largest change in the American diet in the last decade.
By MARGOT SANGER-KATZ

Five years ago, Mayor Michael A. Nutter proposed a tax on soda in Philadelphia, and the industry rose up to beat it back.

Soda lobbyists made campaign contributions to local politicians and staged rallies, with help from allies like the Teamsters union and local bottling companies. To burnish its image, the industry donated $10 million to the Children’s Hospital of Philadelphia.

It worked: The soda tax proposal never got out of a City Council committee.

It’s a familiar story. Soda taxes have also flopped in New York State and San Francisco. So far, only superliberal Berkeley, Calif., has succeeded in adopting such a measure over industry objections.

The obvious lesson from Philadelphia is that the soda industry is winning the policy battles over the future of its product. But the bigger picture is that soda companies are losing the war.

Even as anti-obesity campaigners like Mr. Nutter have failed to pass taxes, they have accomplished something larger. In the course of the fight, they have reminded people that soda is not a very healthy product. They have echoed similar messages coming from public health researchers and others — and fundamentally changed the way Americans think about soda.

Over the last 20 years, sales of full-calorie soda in the United States have plummeted by more than 25 percent. Soda consumption, which rocketed from the 1960s through 1990s, is now experiencing a serious and sustained decline.

Sales are stagnating as a growing number of Americans say they are actively trying to avoid the drinks that have been a mainstay of American culture. Sales of bottled water have shot up, and bottled water is now on track to overtake soda as the largest beverage category in two years, according to at least one industry projection.

The drop in soda consumption represents the single largest change in the American diet in the last decade and is responsible for a substantial reduction in the number of daily calories consumed by the average American child. From 2004 to 2012, children consumed 79 fewer sugar-sweetened beverage calories a day, according to a large government survey, representing a 4 percent cut in calories over all. As total calorie intake has declined, obesity rates among school-age children appear to have leveled off.

The change is happening faster in Philadelphia than in the country as a whole. Daily soda consumption among teenagers, a group closely tracked by federal researchers, dropped sharply — by 24 percent — from 2007 to 2013, compared with about 20 percent for the country. Last month, the city Department of Public Health reported a sustained decline in childhood obesity over the last seven years.

Those reductions are not accidents. The soda tax didn’t pass. But the debate about it, along with a series of related city policies, helped discourage people from drinking soda.

The Philadelphia school district forbids the sale of sugary beverages in schools and limits their availability in public vending machines. The city provides financial incentives for corner stores to highlight healthy foods. And it sends educators into public school classrooms to teach children about nutrition.

Philadelphia, which also has one of the country’s strictest menu-labeling laws, for two years ran radio and television ads encouraging parents to think twice about serving sugary drinks to their children.

“It’s a fight every day, and you just have to stick with it,” said Mayor Nutter, who will leave office in January. “You can’t give up, because it’s just really important.”

But while Philadelphia’s enthusiastic attention has led to outsize results, soda consumption is declining even in cities and towns that have not made big local investments in obesity prevention and public health. The public health community has coalesced around an anti-soda message, and health officials and industry experts agree that public attitudes about soda and consumer tastes are shifting in ways that may be permanent.

The beverage industry continues to fight these shifts — and especially to fight taxes on its products. But it is also aware that after decades of selling a handful of popular, iconic products, changing public attitudes are leading to a profound change in the nature of the business.
The New Tobacco

This summer, executives from the beverage industry gathered at the Harvard Club in New York City. The annual event, hosted by the trade magazine Beverage Digest, featured speakers from the three largest soda makers — Coca-Cola, PepsiCo and the Dr Pepper Snapple Group — along with smaller upstarts, like SodaStream, the home seltzer maker company, and Talking Rain, which makes no-calorie carbonated fruit drinks called Sparkling Ice.

Along the wood-paneled walls, croissants, fruit and silver urns of coffee were laid out. But the hot drinks were largely ignored. The industry’s rapidly expanding bounty was displayed in the center of the room. In an array of ice buckets were Snapple Sorta Sweet, Squirt, Tropicana Farmstand juices, Lipton Sparkling Iced Tea. In a back corner, attendees could make their own lime-basil and coriander apple blossom sodas with a SodaStream machine.

Such events give companies a chance to show their stuff and brag about their successes, but there was nothing bubbly about the atmosphere. This is an industry grasping to master the shifting market.

As John Sicher, Beverage Digest’s publisher, put it in his blunt opening remarks: “It’s been a really challenging decade. It would have been a lot rougher if not for bottled water.”

As sales of the companies’ mainstay products have declined in the United States, the companies have scrambled to offer new products better suited to consumer tastes. Iced teas, sports drinks and flavored waters are smaller but fast-growing segments of the beverage industry. Coca-Cola, for example, has nearly doubled the number of individual products it offers, to 700 this year from 400 in 2004. And companies are increasingly experimenting with smaller packages for sodas, for which customers will pay a higher price per ounce. At the Harvard Club, there was a 7.5-ounce Pepsi minican, which promised “real sugar” instead of high-fructose corn syrup, and a diminutive eight-ounce bottle of Sprite.

“There’s consumers out there that don’t want to consume too much,” said Regan Ebert, the senior vice president for marketing at Dr Pepper Snapple Group, in her presentation on how the company markets its products to Hispanic audiences. The small cans, she said, “do a good job of solving that need for consumers.”